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Westpac served with fresh AUSTRAC-related class action

The major bank has been hit with a new class action lawsuit relating to AUSTRAC’s investigation into its alleged breaches of anti-money laundering laws.

US-based litigator Rosen Law Firm has announced that it has filed a class action lawsuit against Westpac Group on behalf of purchasers of Westpac securities from 11 November 2015 and 19 November 2019.

Litigants have alleged that throughout the period in question, Westpac made false and/or misleading statements and/or failed to disclose that:

  • it failed to report over 19.5 million international funds transfer instructions to financial crime regulator AUSTRAC;
  • it did not appropriately monitor and assess the ongoing money laundering and terrorism financing risks associated with movement of money into and out of Australia;
  • it did not pass on requisite information about the source of funds to other banks in the transfer chain;
  • despite being aware of the heightened risks, it did not carry out appropriate due diligence on transactions in south-east Asia and the Philippines that had known financial indicators relating to child exploitation risks;
  • its AML/CTF program was inadequate to identify, mitigate and manage money laundering and terrorism financing risks; and
  • as a result, its statements about its business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

The law firm’s draft claim names former Westpac CEO Brian Hartzer and current CEO Peter King as defendants.

Westpac has stated that it will be defending the claim and has acknowledged that “other similar lawsuits may be filed”.

Rosen Law Firm’s class action is the second AUSTRAC-related lawsuit launched against Westpac since the regulator’s investigation was first announced to the public.  

In December, class action law firm Phi Finney McDonald commenced civil proceedings in the Federal Court against Westpac, also on behalf of investors who acquired shares between 16 December 2013 to 19 November 2019 (inclusive).

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The claims also relate to Westpac’s monitoring of financial crime and matters that are the subject of AUSTRAC civil penalty orders and relate to alleged “systemic non-compliance” with anti-money laundering laws.

Westpac is also facing several other class actions, such as the Slater and Gordon class action on behalf of superannuation members who were allegedly short-changed by the bank’s super funds, another relating to the alleged mis-selling of consumer credit insurance, and a Maurice Blackburn class action that alleges breaches of responsible lending obligations under the Consumer Credit Protection Act.

The Australian Prudential Regulation Authority (APRA) has also launched an investigation into Westpac to identify possible breaches of the Banking Act while also requiring the bank to hold an additional $500 million in capital.

According to APRA, the investigation will examine whether Westpac, its directors and/or its senior managers breached the Banking Act – including the Banking Executive Accountability Regime – or contravened APRA’s prudential standards.

APRA claimed that it is aiming to “ensure that fundamental deficiencies in Westpac’s risk management framework are identified and addressed” and that Westpac and those responsible are “held accountable as appropriate”.

[Related: Westpac hit with class action after AUSTRAC allegations]

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